EGA delivers record $1.5 billion net profit for 2021

Emirates Global Aluminium (EGA) on Monday reported a net profit of Dh5.5 billion ($1.5 billion), an increase of 1,140 per cent compared to Dh445 million ($121 million) in 2020.

EGA reported record adjusted Earnings Before Interest, Tax, Depreciation and Amortisation (adjusted EBITDA) more than doubled to Dh9.0 billion ($2.5 billion) for 2021, from Dh4.1 billion ($1.1 billion) for 2020, according to a company press release issued on Monday.

EGA’s strongest-ever results were due to a strong global market for aluminium as economies recovered from Covid-19, solid operational performance throughout the value chain, and a focus on efficiency improvements throughout the company.

Production and sales of every commodity in the value chain increased in 2021 compared to 2020.

EGA’s average realised London Metal Exchange aluminium price for 2021 was $2,382 per tonne.

Revenue in 2021 was Dh25.5 billion ($6.9 billion), compared to Dh18.7 billion ($5.1 billion) in 2020.

In 2021, EGA continued to be the largest producer by volume. EGA’s proportion of sales accounted for by value-added products, or ‘premium aluminium’ rose to 84 per cent of total sales, close to a record, compared to 72 per cent in 2020. Value-added products attract higher premiums over benchmark prices than those achieved by standard aluminium and enable EGA to maximise its primary aluminium production value.

EGA significantly deleveraged during 2021 and optimised its capital structure, enabling enhanced future dividend payments to shareholders and creating financial flexibility for future growth.

EGA reduced its senior corporate debt facility by Dh2.7 billion ($730 million) to Dh20.3 billion ($5.5 billion), made scheduled and then full early repayment of the outstanding Dh1.6 billion ($446 million) project financing for the construction of Al Taweelah smelter, and made scheduled repayments on Guinea Alumina Corporation debt.

In total, EGA repaid Dh4.4 billion ($1.2 billion) of debt in 2021. EGA’s net debt to adjusted EBITDA ratio stood at 2.4x at the end of the year.

EGA’s shareholders received AED735 million ($200 million) in dividends in 2021. Additionally, JA Power & Water Co, which owns the highly-efficient H-block power plant at Jebel Ali, was acquired from the shareholders for Dh1.6 billion ($438 million) in December 2021.

EGA’s EBITDA margin was 35 per cent (2020: 22 percent), one of the highest amongst industry peers.

Favourable benchmark London Metal Exchange prices for aluminium, ramp-ups at Al Taweelah alumina refinery and Guinea Alumina Corporation, and cost improvements contributed to an increase in cash generated from operating activities, which was Dh7.5 billion ($2.0 billion) compared to Dh5.5 billion ($1.5 billion) in 2020.

Early in 2021, in a significant step towards broader decarbonisation, EGA became the first company to produce aluminium commercially using the sun’s power through a partnership with Dubai Electricity & Water Authority. Production of CelestiAL solar aluminium was almost 39 thousand tonnes during 2021, with all production supplied to BMW Group.

Abdulnasser bin Kalban, Chief Executive Officer of EGA, said these record results show that our preparations for the next stage of our corporate journey are nearing completion.

"EGA today has strength from mine to metal, an optimised capital structure to continue delivering significant dividends to shareholders in future and grow our business, and a path to greatly reducing our carbon footprint," he said.

“In the shorter term, strong demand has continued in the first quarter of 2022. While like others we are still facing challenges with global logistics, we have adopted new approaches such as breakbulk shipping to overcome them,” he added.

Zouhir Regragui, chief financial officer of EGA, said higher aluminium prices have prevailed since the world started rebounding from Covid-19, and this demonstrates the strong long-term outlook for our metal as a key material for the development of a more sustainable future. "We will take more bold steps to strengthen our sustainability. Our deleveraging trajectory remains very strong, driven by both market conditions and our efforts to improve EBITDA. As a result, EGA is increasingly well-set for the next phase of our growth journey,” he said.

Total sales of cast metal rose slightly to 2.54 million tonnes, as progress in debottlenecking and the completion of an expansion in Al Taweelah was offset by maintenance shutdowns and global logistics constraints.

EGA delivered record production at both the company’s upstream projects, in only their second full year after start-up.

Al Taweelah alumina refinery exceeded its nameplate capacity by 15 per cent, delivering some 2.3 million tonnes of alumina to EGA’s aluminium smelters in a world-class performance, making an Dh830 million ($226 million) contribution to EGA adjusted EBITDA.

Exports of bauxite ore from Guinea Alumina Corporation totalled 12 million wet metric tonnes, an increase of 2.3 million tonnes in 2020 and contributing Dh340 million ($92 million) to EGA’s adjusted EBITDA. GAC’s production, which is mostly shipped to external customers, made EGA one of the largest merchant bauxite suppliers in the world.

EGA commissioned 66 new reduction cells at Al Taweelah smelter in phases as planned during 2021, adding 78 thousand tonnes of hot metal production capacity.

Local sales to downstream customers in the UAE were 281 thousand tonnes, compared to 252 thousand tonnes in 2020, further growing EGA’s contribution to the UAE economy in line with the target to double absolute economic impact by 2040.

EGA’s Lost Time Injury Frequency Rate in 2021 was 0.11 per million hours worked. The Total Recordable Injury Frequency Rate (a measure of all incidents including those not requiring time off work), was 1.1 per million hours worked. Both were significantly better than industry benchmarks. EGA’s goal is zero harm.

— business@khaleejtimes.com